RBI's renewed challenges

The second wave could increase risk for the banking system

The Indian economy has been recovering well in recent months but a sudden surge in Covid-19 cases has increased risks. A number of states are imposing restrictions on mobility to contain the virus. While this may be unavoidable in many parts of the country, it will still affect the economy in multiple ways. Apart from growth, disruption in supply chains will also affect inflation outcomes. The latest monthly bulletin of the Reserve Bank of India (RBI), for instance, notes that if the resurgence in infection is not contained in time, protracted restrictions and supply-chain disruption can increase inflation risks. The